‘Significant’ US Gulf Find Could Test BP’s Strategy

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Industry insiders believe BP could have a significant oil discovery on its hands at Puma West in the deepwater Gulf of Mexico, raising questions about how the operator will approach a potential development in light of a broader strategy that envisions lower oil and natural gas production over time. Sources with knowledge of the Puma West well results say the probe encountered “hundreds” of feet of oil pay and that the primary geologic target has not yet been fully explored (OD Apr.13'21). “Since the well was drilled very high on structure, and [they] are now tied into the seismic, they see areas downdip where additional well-developed sands should be oil-bearing,” one source told Energy Intelligence. “If those work, then maybe it will be massive.” All sources, including BP, stressed that further drilling and appraisals will be needed to gauge the full size of Puma West, and that will inform any future development options. But a significant deepwater oil discovery is not necessarily the market-moving news it once was, and it is not clear that investors today will reward a corporate story that involves capital-intensive oil development at a time when debt reduction and energy transition are primary areas of focus. “It could be a key test case for how BP chooses to frame this in the context of its new strategy,” says Alex Martinos, manager of Energy Intelligence’s Research & Advisory unit, referring to a plan unveiled last summer that would see the supermajor’s oil output decline by around 40% by 2030 as it pivots toward renewables and more low-carbon businesses (OD Sep.14'20). Oil in an Oil Field The sub-salt Puma oil field has long shown up on maps of the US Gulf but had not been tested until now because of the unreliability of seismic imaging below the salt layer, industry sources say. Minority partner Talos Energy said last month that the Puma West well had to get through some 8,000-10,000 feet of salt before reaching a total depth of 23,530 feet. Difficulty drilling in and out of salt forced the partners to plug the initial well, delaying operations for nearly a year (OD Feb.3'20). But BP has applied advanced seismic imaging across much of its US Gulf acreage, paving the way for hundreds of millions of barrels’ worth of brownfield development near its existing assets (OD Jan.9'19). It moved deliberately to take over the Puma West prospect from Talos and quickly farmed down a third of its then-75% stake to Chevron shortly before the well spud in 2019 (OD Sep.20'19). In its discovery announcement last week, BP noted the “high-quality Miocene reservoir” at Puma West with properties “similar to productive Miocene reservoirs in the area.” That would surely include the “super-giant” Mad Dog field next door, where BP has identified a resource of some 5 billion barrels of oil equivalent. By next year, BP will have its second Mad Dog production platform on line, adding to the expansive infrastructure that already exists in the area and giving the partners options if a subsea tie-back is ultimately the preferred development path for Puma West (OD Apr.12'21).

Exploration, Offshore Oil and Gas, Corporate Strategy
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